Fracking Could Raise New Issue Between Homeowners and Mortgage Companies

The North Carolina legislature passed legislation legalizing fracking in July 2012. Fracking, or hydraulic fracturing, is the practice of using highly pressurized liquids to extract natural gas or oil from the earth. During the debates and discussion, there were many debates about the environmental and economic impact that this legislation may have on the state. However, one issue that went largely not discussed is the potential impact that fracking could have on the state’s housing industry.

Now, the sale of these mineral rights did not receive detailed attention for many years because they were not fully utilized. However, with the rising interest in fracking in North Carolina, there is the potential that their owners may take an interest in enforcing their rights. The problem arises where the utilization of these rights might impact the value and foundation of the mortgaged property (such as building roads, pipelines, drills, etc.). There may also be issues with the regulations of Fannie Mae and Freddie Mac, who require that drilling and mineral leases be handled in certain manners. Some mortgage companies have considered this issue and are refusing to lend to properties without the mineral rights, while most do not have this policy. It will be interesting to see if more mortgage companies limit their lending to properties with their full mineral rights in the future. More information on a homeowner’s rights can be found at RAFI-USA’s resource page.